CEO's statement

A statement from our departing and new CEOs

BEIJER GROUP achieved notable successes, with high growth in 2021. The strong demand for our products was broad based, with good geographical diversity, covering all segments the Group addresses. Order intake was up by 40% to a new record level, passing a milestone of over 2 billion SEK. Sales increased by 13%, and EBIT was nearly 70 MSEK. This excellent growth is largely down to customers increasing activity levels after being negatively impacted by the pandemic, and countless lockdowns.

Unfortunately, in the wake of the pandemic, the world has been affected by serious supply chain imbalances. This has affected many input goods, as well as transportation, but the biggest impact has been on the supply of electronic components. In a situation where the supply of electronic components from all the world’s major producers has fallen behind demand, we adopted the conscious strategy of prioritizing our supply capability to customers wherever possible, so we can maintain good relationships. This meant we had to source some components in shortage at significantly higher prices on the spot market to avoid production stoppages. This helped maintain acceptable delivery capacity, which our customers appreciated. But sales and EBIT were still negatively impacted by the shortages, both through reduced shipments and increased costs, which we were not able to counter fully with price increases, especially late in the year. Otherwise, sales and earnings would have been higher.

We’ve made our offering still stronger

We’ve focused on emerging stronger from the pandemic, and the economic challenges that dominated the global economy over the past two years. That’s why we decided to maintain a balanced tempo of product development, launching a stream of new products, and advanced our positioning in product and market terms. In the year, Westermo acquired German enterprise Eltec, which added wireless communication solutions for passenger information on trains to this business entity’s offering. Our subsidiary Virtual Access launched the first product in a planned product  family called Merlin, primarily addressing the energy segment. Another major milestone in the energy segment initiative was Westermo’s launch of the first product approved for automating substations. An extensive upgrade of the WeOS operating system, with enhanced functionality, was implemented in the year.

Beijer Electronics introduced 16 new products, with software upgrades including iX software, which had new functionality added. Korenix took more steps in the new product plan founded on its new platform—the Korenix Switch OS Platform, consisting of software and hardware.

Our initiatives are paving the way for continued high growth

Our initiatives should pave the way for continued high growth, and are part of the long-term strategy we staked out in 2016. BEIJER GROUP has transformed into a pure technology and knowledge group, where products and services we’ve developed ourselves, mainly as software and hardware, now represent over 90% of sales. Most of our sales are also new products. We have a strong and competitive offering to the market and our customers that we will benefit from. Our customers appreciate our strategy, and their interest in our solutions is growing. Accordingly, there’s great potential to increase sales to current business customers and address new business customers to bring them into our customer base.

Digitalization is the core, collective driver of growth. Global pandemic support has largely been channeled into infrastructure investments, which has contributed, and will continue to contribute, to good demand. But at the same time, like the rest of the business community, Beijer Group is dependent on the general global economic cycle. After the downturn of 2020, the global economy recovered in 2021. The pandemic caused major problems, as stated above, problems that persisted into the New Year to some extent. At the time of writing, the pandemic appears to be tapering off, but when the situation will normalize completely is hard to predict. The conflict in the Ukraine has also increased risks in the global economy, but it is too early to evaluate its effects on economic activity across the world. BEIJER GROUP’s direct business exposure to this region is very low.

Targets: minimum growth of 10%, with a 15% EBIT margin

BEIJER GROUP’s revenue model is based on close partnerships with customers on long-term development projects. Finished products that integrate software and hardware are specific, and built into customers’ complete solutions with lifecycles up towards ten years. This generates repeat and stable revenues over the long-term. Additionally, future software upgrades present an opportunity to expand business. 

Overall, the strategy is founded on beijer group’s companies being capable of achieving minimum yearly growth of 10%, with the potential to achieve an EBIT margin of 15%.

Successes backed by our people

BEIJER GROUP’s organizational and human resources have every chance of achieving these targets. The efforts and skills of our people were decisive to mitigating the effects of the pandemic and economic challenges as far as possible. In what, hopefully, are more normal circumstances, this work will become more apparent and evident in our sales and earnings. Individual professional performances, backed by mutual support and access to the Group’s resources, generate our results. The guiding principle is freedom with responsibility. Individual freedom offers room for creativity, but this also entails individual responsibility for compliance with laws, regulations and our guidelines for managing a sustainable business.

Sustainability is an important component that should be integrated into BEIJER GROUP’s operations. In the year, we closely monitored and analyzed the EU Taxonomy, a classification system for sustainable investments, and how the Taxonomy impacts our business. We offer more information on this in our Sustainability Report, published in full separately. There’s a summary in this Annual Report.

Priorities in 2022

We’re putting a great emphasis on increasing our profitability as we converge on our targets. After the effects of the pandemic, including sickness absence and major disruptions in the supply of materials, there is room for improvement. Higher capacity utilization and less disruptions will be contributors to increasing productivity. Continued sales gains are also helping lift profitability. We’re also aware of the rising rate of inflation, and are ready to make further price adjustments; we’ve already implemented or announced price increases to compensate for higher purchasing costs. These increases will take impact with some lag through the current year. 

Additionally, we will keep developing, and exploiting, opportunities presented by the merger between Beijer Electronics and Korenix. Since year-end, these business entities have been operating through a shared organization in operational terms, with a clear management structure. External reporting will be under a collective entity named Beijer Electronics. Since this partnership began in 2020, the business entities have coordinated their marketing, sales, supply chains and inventory management.

A breakthrough order worth some 24 MSEK from one of the world’s largest semiconductor manufacturers, which Beijer Electronics and Korenix secured jointly in late- 2021, is evidence that this is the right direction. The coordination of manufacturing and production will be complete in 2022. Product development will also be coordinated.

Outlook for 2022

Overall, with our goal-oriented approach, we’ve created a secure base for continued good growth and increased profitability through the coming years. In early-2022, demand remained positive on a growing market. Beijer Group has also moved into the new year with a record order book and stronger customer offering. Accordingly, our opinion is that the Group has good potential to keep reporting improved financial results for 2022 compared to 2021. 
    

Jenny Sjödahl
New President & CEO

Per Samuelsson
Departing President & CEO